[Federal Register Volume 87, Number 75 (Tuesday, April 19, 2022)]
[Notices]
[Pages 23291-23296]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08283]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94710; File No. SR-FINRA-2022-010]


Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Adopt on a Permanent Basis the Pilot Program 
for Market-Wide Circuit Breakers in FINRA Rule 6121.02 (Market-Wide 
Circuit Breakers in NMS Stocks)

April 13, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on April 13, 2022, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by FINRA. FINRA has designated 
the proposed rule change as constituting a ``non-controversial'' rule 
change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which 
renders the proposal effective upon receipt of this filing by the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to adopt on a permanent basis the pilot program 
for Market-Wide Circuit Breakers in FINRA Rule 6121.02 (Market-wide 
Circuit Breakers in NMS Stocks).
    The text of the proposed rule change is available on FINRA's 
website at http://www.finra.org, at the principal office of FINRA and 
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. FINRA has prepared summaries, set forth in sections A, 
B,

[[Page 23292]]

and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On March 16, 2022, the Commission approved the proposal of the New 
York Stock Exchange LLC (``NYSE'') to adopt on a permanent basis the 
pilot program for Market-Wide Circuit Breakers (``MWCB'') in NYSE Rule 
7.12.\4\ FINRA now proposes to adopt the MWCB pilot program as 
permanent in FINRA Rule 6121.02.
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    \4\ See Securities Exchange Act Release No. 94441 (March 16, 
2022), 87 FR 16286 (March 22, 2022) (Order Approving File No. SR-
NYSE-2021-40). The proposed rule change would also make two non-
substantive, technical changes. First, the proposed rule change 
would update the citation in Rule 6121 for the definition of ``NMS 
stock'' under Regulation NMS from Rule 600(b)(47) to Rule 600(b)(55) 
to reflect recent reorganization of the defined terms in Rule 600 of 
Regulation NMS. Second, consistent with FINRA rulebook style, the 
proposed rule change would change the reference to the ``Securities 
and Exchange Commission'' in Rule 6121 to the ``SEC.''
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The Pilot Rules
    The MWCB rules, including FINRA's Rule 6121.02, provide an 
important, automatic mechanism that is invoked to promote stability and 
investor confidence during periods of significant stress when cash 
equities securities experience extreme market-wide declines. The MWCB 
rules are designed to slow the effects of extreme price declines 
through coordinated trading halts across both cash equity and equity 
options securities markets.
    The cash equities rules governing MWCBs were first adopted in 1988 
and, in 2012, all U.S. cash equity exchanges and FINRA amended their 
cash equities uniform rules on a pilot basis (the ``Pilot Rules,'' 
i.e., Rule 6121.02 (a)-(c)).\5\ The Pilot Rules currently provide for 
trading halts in all cash equity securities during a severe market 
decline as measured by a single-day decline in the S&P 500 Index 
(``SPX'').\6\ Under the Pilot Rules, a market-wide trading halt will be 
triggered if SPX declines in price by specified percentages from the 
prior day's closing price of that index. The triggers are set at three 
circuit breaker thresholds: 7% (Level 1), 13% (Level 2), and 20% (Level 
3). A market decline that triggers a Level 1 or Level 2 halt after 9:30 
a.m. and before 3:25 p.m. would halt market-wide trading for 15 
minutes, while a similar market decline at or after 3:25 p.m. would not 
halt market-wide trading. (Level 1 and Level 2 halts may occur only 
once a day.) A market decline that triggers a Level 3 halt at any time 
during the trading day would halt market-wide trading for the remainder 
of the trading day.
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    \5\ See Securities Exchange Act Release No. 67090 (May 31, 
2012), 77 FR 33531 (June 6, 2012) (SR-BATS-2011-038; SR-BYX-2011-
025; SR-BX-2011-068; SR-CBOE-2011-087; SR-C2-2011-024; SR-CHX-2011-
30; SR-EDGA-2011-31; SR-EDGX-2011-30; SR-FINRA-2011-054; SR-ISE-
2011-61; SR-NASDAQ-2011-131; SR-NSX-2011-11; SR-NYSE-2011-48; SR-
NYSEAmex-2011-73; SR-NYSEArca-2011-68; SR-Phlx-2011-129) (``Pilot 
Rules Approval Order'').
    \6\ The rules of the equity options exchanges similarly provide 
for a halt in trading if the cash equity exchanges invoke a MWCB 
Halt. See, e.g., NYSE Arca Rule 6.65-O(d)(4).
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    The Commission approved the Pilot Rules, the term of which was to 
coincide with the pilot period for the Plan to Address Extraordinary 
Market Volatility Pursuant to Rule 608 of Regulation NMS (the ``LULD 
Plan''),\7\ including any extensions to the pilot period for the LULD 
Plan.\8\ In April 2019, the Commission approved an amendment to the 
LULD Plan for it to operate on a permanent, rather than pilot, 
basis.\9\ In light of the proposal to make the LULD Plan permanent, 
FINRA amended Rule 6121.02 to untie the pilot's effectiveness from that 
of the LULD Plan and to extend the pilot's effectiveness to the close 
of business on October 18, 2019.\10\ FINRA then filed to extend the 
pilot to the close of business on October 18, 2020,\11\ October 18, 
2021,\12\ March 18, 2022,\13\ and April 18, 2022.\14\
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    \7\ See Securities Exchange Act Release No. 67091 (May 31, 
2012), 77 FR 33498 (June 6, 2012). The LULD Plan provides a 
mechanism to address extraordinary market volatility in individual 
securities.
    \8\ See Securities Exchange Act Release Nos. 67090 (May 31, 
2012), 77 FR 33531 (June 6, 2012) (Order Approving File No. SR-
FINRA-2011-054); and 68778 (January 31, 2013), 78 FR 8668 (February 
6, 2013) (Notice of Filing and Immediate Effectiveness of File No. 
SR-FINRA-2013-011).
    \9\ See Securities Exchange Act Release No. 85623 (April 11, 
2019), 84 FR 16086 (April 17, 2019) (Order Approving the Eighteenth 
Amendment to the National Market System Plan To Address 
Extraordinary Market Volatility).
    \10\ See Securities Exchange Act Release No. 85547 (April 8, 
2019), 84 FR 14981 (April 12, 2019) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2019-010).
    \11\ See Securities Exchange Act Release No. 87078 (September 
24, 2019), 84 FR 51669 (September 30, 2019) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2019-023).
    \12\ See Securities Exchange Act Release No. 90160 (October 13, 
2020), 85 FR 67072 (October 21, 2020) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2020-033).
    \13\ See Securities Exchange Act Release No. 93300 (October 13, 
2021), 86 FR 57867 (October 19, 2021) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2021-027).
    \14\ See Securities Exchange Act Release No. Release No. 94428 
(March 16, 2022), 87 FR 16265 (March 22, 2022) (Notice of Filing and 
Immediate Effectiveness of File No. SR-FINRA-2022-005).
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The MWCB Working Group Study
    Beginning in February 2020, at the outset of the COVID-19 pandemic, 
the markets experienced increased volatility, culminating in four MWCB 
Level 1 halts on March 9, 12, 16, and 18, 2020. In each instance, 
pursuant to the Pilot Rules, the markets halted as intended upon a 7% 
drop in SPX and did not start the process to resume trading until the 
prescribed 15-minute halt period ended.
    On September 17, 2020, the Director of the Commission's Division of 
Trading and Markets asked the SROs to conduct a study of the design and 
operation of the Pilot Rules and the LULD Plan during the period of 
volatility in March 2020. In response to the request, the SROs created 
a MWCB ``Working Group'' composed of SRO representatives and industry 
advisers that included members of the advisory committees to both the 
LULD Plan and the NMS Plans governing the collection, consolidation, 
and dissemination of last-sale transaction reports and quotations in 
NMS Stocks. The Working Group met regularly from September 2020 through 
March 2021 to consider the Commission's request, review data, and 
compile its study.
    On March 31, 2021, the MWCB Working Group submitted its study (the 
``Study'') to the Commission.\15\ The Study included an evaluation of 
the operation of the Pilot Rules during the March 2020 events and an 
evaluation of the design of the current MWCB system. In the Study, the 
Working Group concluded: (1) The MWCB mechanism set out in the Pilot 
Rules worked as intended during the March 2020 events; (2) the MWCB 
halts triggered in March 2020 appear to have had the intended effect of 
calming volatility in the market, without causing harm; (3) the design 
of the MWCB mechanism with respect to reference value (SPX), trigger 
levels (7%/13%/20%), and halt times (15 minutes) is appropriate; (4) 
the change implemented in Amendment 10 to the LULD Plan did not likely 
have any negative impact on MWCB functionality; and (5) no changes 
should be made to the mechanism to prevent the market from halting 
shortly after the opening of regular trading hours at 9:30 a.m.
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    \15\ See Report of the Market-Wide Circuit Breaker (``MWCB'') 
Working Group Regarding the March 2020 MWCB Events, submitted March 
31, 2021 (the ``Study''), available at https://www.nyse.com/publicdocs/nyse/markets/nyse/Report_of_the_Market-Wide_Circuit_Breaker_Working_Group.pdf.
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    In light of those conclusions, the MWCB Working Group also made 
several recommendations, including

[[Page 23293]]

that (1) the Pilot Rules should be made permanent without any changes, 
and (2) SROs should adopt a rule requiring all designated Regulation 
SCI firms to participate in at least one Level 1/Level 2 MWCB test each 
year and to verify their participation via attestation.\16\
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    \16\ See the Study, supra note 15, at 46.
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Proposal To Make the Pilot Rules Permanent
    On July 16, 2021, NYSE proposed a rule change to make the Pilot 
Rules permanent, consistent with the Working Group's 
recommendations.\17\ On March 16, 2022, the Commission approved NYSE's 
proposal.\18\
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    \17\ See Securities Exchange Act Release No. 92428 (July 16, 
2021), 86 FR 38776 (July 22, 2021) ((Notice of Filing File No. SR-
NYSE-2021-40).
    \18\ See supra note 4.
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    Consistent with the Commission's approval of NYSE's proposal, FINRA 
now proposes that paragraphs (a) through (c) of Rule 6121.02 be made 
permanent. To accomplish this, FINRA proposes to remove the text of 
existing paragraph (d) of Rule 6121.02, which currently provides that 
the provisions of Rule 6121.02 shall be in effect during a pilot period 
that expires at the close of business on April 18, 2022. FINRA does not 
propose any changes to paragraphs (a) through (c) of Rule 6121.02.
    Consistent with the Commission's approval of NYSE's proposal, FINRA 
proposes to add new paragraphs (d), (e), and (f) to Rule 6121.02, as 
follows:
    (d) Market-Wide Circuit Breaker (``MWCB'') Testing.
    (1) FINRA will participate in all industry-wide tests of the MWCB 
mechanism. Members designated pursuant to Rule 4380 (Mandatory 
Participation in FINRA BC/DR Testing Under Regulation SCI) with respect 
to a FINRA Trade Reporting Facility (``TRF'') or the Alternative 
Display Facility (``ADF'') to participate in FINRA's periodic, 
scheduled testing of their business continuity and disaster recovery 
(``BC/DR'') plans are required to participate in at least one industry-
wide MWCB test each year and to verify their participation in that test 
by attesting that they are able to or have attempted to:
    (A) Receive and process MWCB halt messages from the securities 
information processors (``SIPs'');
    (B) receive and process resume messages from the SIPs following a 
MWCB halt;
    (C) receive and process market data from the SIPs relevant to MWCB 
halts; and
    (D) send quotes, trades or both, as applicable, to the facility or 
facilities for which the member has been designated pursuant to Rule 
4380 following a Level 1 or Level 2 MWCB halt in a manner consistent 
with their usual trading behavior.
    (2) To the extent that a member participating in a MWCB test is 
unable to receive and process any of the messages identified in 
paragraph (d)(1)(A) through (D) above, its attestation should notify 
FINRA which messages it was unable to process and, if known, why.
    (3) Members not designated pursuant to Rule 4380 are permitted to 
participate in any MWCB test.
    (e) In the event that a MWCB is triggered following a Level 1, 
Level 2, or Level 3 Market Decline, FINRA, together with other SROs and 
industry representatives (the ``MWCB Working Group''), will review such 
event. The MWCB Working Group will prepare a report that documents its 
analysis and recommendations and will provide that report to the SEC 
within six months of the event.
    (f) In the event that there is (1) a Market Decline of more than 
five percent, or (2) an SRO implements a rule that changes its 
reopening process following a MWCB Halt, FINRA, together with the MWCB 
Working Group, will review such event and consider whether any 
modifications should be made to FINRA Rule 6121.02. If the MWCB Working 
Group recommends that a modification should be made to FINRA Rule 
6121.02, the MWCB Working Group will prepare a report that documents 
its analysis and recommendations and provide that report to the SEC.
    The MWCB testing requirement that FINRA is proposing to add as the 
new text of paragraph (d) of Rule 6121.02 is consistent with the MWCB 
testing obligation adopted by the exchanges (e.g., NYSE Rule 7.12(e)) 
that requires all designated Regulation SCI firms to participate in at 
least one MWCB test each year. However, the language of proposed Rule 
6121.02(d) has been modified from the language of NYSE Rule 7.12(e) in 
two regards to account for FINRA's unique role in the equity markets, 
as follows.
    First, FINRA's testing requirement would apply on a facility-by-
facility basis. Like the exchanges, Regulation SCI requires that FINRA 
designate firms that must participate in the testing of the firm's 
business continuity and disaster recovery BC/DR plans. To comply with 
this Regulation SCI requirement, FINRA adopted Rule 4380, which 
authorizes FINRA to designate member firms that must participate in 
annual BC/DR testing according to established criteria designed to 
ensure participation by firms FINRA reasonably determines are, taken as 
a whole, the minimum necessary for maintaining fair and orderly markets 
in the event of the activation of its BC/DR plan. As summarized in 
Regulatory Notice 19-15,\19\ FINRA applies specified criteria to 
designate firms under Rule 4380 on a facility-by-facility basis, 
including designation of participants of the TRFs \20\ and the ADF.\21\ 
As the TRFs and ADFs are the FINRA facilities relevant to quoting and 
trading NMS stocks, FINRA believes that firms designated under Rule 
4380 with respect to any TRF or the ADF should be required to 
participate in annual MWCB testing.\22\ Therefore, in line with the 
exchanges' MWCB testing rule, paragraph (d)(1) of Rule 6121.02 would 
provide that members designated pursuant to Rule 4380 for BC/DR testing 
with respect to a TRF or the ADF are required to participate in at 
least one industry-wide MWCB test each year.
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    \19\ See Regulatory Notice 19-15 (April 19, 2019) (``Designation 
Notice'').
    \20\ The TRFs provide FINRA members with a mechanism to report 
over-the-counter (``OTC'') transactions in NMS stocks. There are 
currently three active TRFs: (1) FINRA/Nasdaq TRF Carteret, (2) 
FINRA/Nasdaq TRF Chicago and (3) FINRA/NYSE TRF. While each TRF is 
operated by an affiliate of a registered national securities 
exchange, each TRF is a FINRA facility and subject to FINRA's 
oversight.
    \21\ The ADF is a display-only facility operated by FINRA that 
provides FINRA members with a mechanism to display quotations and 
report OTC transactions in NMS stocks.
    \22\ For the TRFs, FINRA will designate those TRF participants 
that account for five percent or more of the total number of trades 
reported to the TRF over the six-month period immediately preceding 
designation, provided that the cumulative trade volume represented 
by designated firms amounts to at least 50 percent of all trade 
volume reported to the TRF during the applicable six-month period. 
Trade volume for purposes of Rule 4380 is separately calculated for 
each TRF. For the ADF, there currently are not any active 
participants. If the ADF becomes active, FINRA will then study the 
system's activity to establish appropriate criteria for member 
designation. See Designation Notice, supra note 19, at 2.
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    Second, consistent with the exchanges' rules, such designated 
members would be required to verify their participation in the annual 
MWCB test by attesting that they are able to or have attempted to 
undertake four specified actions related to operation of MWCB halts. 
The first three of these actions, set forth in paragraphs (d)(1)(A) 
through (C) of proposed Rule 6121.02, would be identical to the 
exchanges' testing rules and would require that such members attest 
that they are able to or have attempted to: (A) Receive and process 
MWCB halt messages from the SIPs; (B) receive and process resume 
messages from the SIPs following a

[[Page 23294]]

MWCB halt; and (C) receive and process market data from the SIPs 
relevant to MWCB halts. The fourth element specified in the exchanges' 
rules requires that designated member organizations attest that they 
are able to or have attempted to send orders following a Level 1 or 
Level 2 MWCB halt in a manner consistent with their usual trading 
behavior. The TRFs and the ADF are facilities for reporting OTC 
transactions in NMS stocks and, in the case of the ADF, displaying 
quotations in NMS stocks. Therefore, FINRA is proposing a modified 
requirement in paragraph (d)(1)(D) for designated members to attest 
that they are able to or have attempted to send quotes, trades or both, 
as applicable, to the facility or facilities for which they have been 
designated pursuant to Rule 4380 in a manner consistent with their 
usual trading behavior.
    FINRA has filed the proposed rule change for immediate 
effectiveness and has requested that the SEC waive the requirement that 
the proposed rule change not become operative for 30 days after the 
date of the filing, so FINRA can implement the proposed rule change 
immediately.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\23\ which requires, among 
other things, that FINRA rules must be designed to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest.
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    \23\ 15 U.S.C. 78o-3(b)(6).
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    The Pilot Rules set out in Rule 6121.02 (a) through (c) are an 
important, automatic mechanism that is invoked to promote stability and 
investor confidence during periods of significant market stress when 
securities markets experience broad-based declines. The four MWCB halts 
that occurred in March 2020 provided FINRA, the other SROs, and market 
participants with real-world experience as to how the Pilot Rules 
actually function in practice. Based on the Working Group's Study and 
FINRA's own analysis of those events, FINRA believes that making the 
Pilot Rules permanent would benefit market participants, promote just 
and equitable principles of trade, remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
and protect investors and the public interest.
    Specifically, FINRA believes that making the Pilot Rules permanent 
would benefit market participants, promote just and equitable 
principles of trade, remove impediments to and perfect the mechanism of 
a free and open market and a national market system, and protect 
investors and the public interest, because the Pilot Rules worked as 
intended during the March 2020 events. As detailed above, the markets 
were in communication before, during, and after each of the MWCB Halts 
that occurred in March 2020. All 9,000+ equity symbols were 
successfully halted in a timely manner when SPX declined 7% from the 
previous day's closing value, as designed. FINRA believes that market 
participants would benefit from having the Pilot Rules made permanent 
because such market participants are familiar with the design and 
operation of the MWCB mechanism set out in the Pilot Rules, and know 
from experience that it has functioned as intended on multiple 
occasions under real-life stress conditions. Accordingly, FINRA 
believes that making the Pilot Rules permanent would enhance investor 
confidence in the ability of the markets to successfully halt as 
intended when under extreme stress.
    FINRA further believes that making the Pilot Rules permanent would 
benefit market participants, promote just and equitable principles of 
trade, remove impediments to and perfect the mechanism of a free and 
open market and a national market system, and protect investors and the 
public interest, because the halts that were triggered pursuant to the 
Pilot Rules in March 2020 appear to have had the intended effect of 
calming volatility in the market without causing harm. As detailed 
above, after studying a variety of metrics concerning opening and 
reopening auctions, quote volatility, and other factors, FINRA 
concluded that there was no significant difference in the percentage of 
securities that opened on a trade versus on a quote for the four days 
in March 2020 with MWCB Halts, versus the other periods studied. In 
addition, while the post-MWCB Halt reopening auctions were smaller than 
typical opening auctions, the size of those post-MWCB Halt reopening 
auctions plus the earlier initial opening auctions in those symbols was 
on average equal to opening auctions in January 2020. FINRA believes 
this indicates that the MWCB Halts on the four March 2020 days did not 
cause liquidity to evaporate. Finally, FINRA observes that, while quote 
volatility was generally higher on the four days in March 2020 with 
MWCB Halts as compared to the other periods studied, quote volatility 
stabilized following the MWCB Halts at levels similar to the January 
2020 levels, and LULD Trading Pauses worked as designed to address any 
additional volatility later in the day. From this evidence, FINRA 
concludes that the Pilot Rules actually calmed volatility on the four 
MWCB Halt days in March 2020, without causing liquidity to evaporate or 
otherwise harming the market. As such, FINRA believes that making the 
Pilot Rules permanent would remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and 
protect investors and the public interest.
    FINRA believes that making the Pilot Rules permanent without any 
changes would benefit market participants, promote just and equitable 
principles of trade, remove impediments to and perfect the mechanism of 
a free and open market and a national market system, and protect 
investors and the public interest, because the current design of the 
MWCB mechanism as set out in the Pilot Rules remains appropriate. As 
detailed above, FINRA considered whether SPX should be replaced as the 
reference value, whether the current trigger levels (7%/13%/20%) and 
halt times (15 minutes for Level 1 and 2 halts) should be modified, and 
whether changes should be made to prevent the market from halting 
shortly after the opening of regular trading hours at 9:30 a.m., and 
concluded that the MWCB mechanism set out in the Pilot Rules remains 
appropriate, for the reasons cited above. FINRA believes that public 
confidence in the MWCB mechanism would be enhanced by the Pilot Rules 
being made permanent without any changes, given investors' familiarity 
with the Pilot Rules and their successful functioning in March 2020.
    FINRA believes that proposed new paragraph (d) regarding MWCB 
testing is designed to promote just and equitable principles of trade, 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general to protect 
investors and the public interest. The Working Group recommended that 
all cash equities exchanges adopt a rule requiring all designated 
Regulation SCI firms to participate in MWCB testing and to attest to 
their participation. FINRA believes that these requirements would 
promote the stability of the markets and enhance investor confidence in 
the MWCB mechanism and the protections that it provides to the markets 
and to investors. FINRA further believes that

[[Page 23295]]

requiring firms participating in a MWCB test to identify any inability 
to process messages pertaining to such MWCB test would contribute to a 
fair and orderly market by flagging potential issues that should be 
corrected. FINRA would preserve such attestations pursuant to its 
obligations to retain books and records of FINRA.\24\
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    \24\ See 17 CFR 240.17a-1.
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    FINRA believes that proposed paragraph (e) would benefit market 
participants, promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and protect investors and the public 
interest. Having the MWCB Working Group review any halt triggered under 
Rule 6121.02 and prepare a report of its analysis and recommendations 
would permit FINRA, along with other market participants and the 
Commission, to evaluate such event and determine whether any 
modifications should be made to Rule 6121.02 in the public interest. 
Preparation of such a report within six months of the event would 
permit FINRA, along with the MWCB Working Group, sufficient time to 
analyze such halt and prepare their recommendations.
    FINRA believes that proposed paragraph (f) would benefit market 
participants, promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and protect investors and the public 
interest. Having the MWCB Working Group review instances of a Market 
Decline of more than 5% or an SRO implementing a rule that changes its 
reopening process following a MWCB Halt would allow the MWCB Working 
Group to identify situations where it would recommend that Rule 6121.02 
be modified in the public interest. In such situations where the MWCB 
Working Group recommends that a modification should be made to Rule 
6121.02, the MWCB Working Group would prepare a report that documents 
its analysis and recommendations and provide that report to the 
Commission, thereby removing impediments to and perfecting the 
mechanism of a free and open market and a national market system while 
protecting investors and the public interest.
    For the foregoing reasons, FINRA believes that the proposed rule 
change is consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change is not 
intended to address competition, but rather, makes permanent the 
current MWCB Pilot Rules for the protection of the markets. FINRA 
believes that making the current MWCB Pilot Rules permanent would have 
no discernable burden on competition at all, since the Pilot Rules have 
already been in effect since 2012 and would be made permanent without 
any changes. Moreover, because the MWCB mechanism contained in the 
Pilot Rules requires all exchanges and all market participants to cease 
trading at the same time, making the Pilot Rules permanent would not 
provide a competitive advantage to any exchange or any class of market 
participants.
    Further, FINRA understands that the other SROs have or will submit 
substantively identical proposals to the Commission. Thus, the proposed 
rule change will help to ensure consistency across SROs without 
implicating any competitive issues.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \25\ and Rule 19b-
4(f)(6) thereunder.\26\
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    \25\ 15 U.S.C. 78s(b)(3)(A).
    \26\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \27\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\28\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange asked 
that the Commission waive the 30 day operative delay so that the 
proposal may become operative immediately upon filing. Waiver of the 
30-day operative delay would allow the Exchange to immediately provide 
the protections included in this proposal in the event of a MWCB halt, 
which is consistent with the protection of investors and the public 
interest. Therefore, the Commission hereby waives the 30-day operative 
delay and designates the proposed rule change as operative upon 
filing.\29\
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    \27\ 17 CFR 240.19b-4(f)(6).
    \28\ 17 CFR 240.19b-4(f)(6)(iii).
    \29\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-FINRA-2022-010 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2022-010. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written

[[Page 23296]]

communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for website viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE, Washington, DC 20549, on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
the filing also will be available for inspection and copying at the 
principal office of the Exchange.
    All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions.
    You should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-FINRA-2022-010 
and should be submitted on or before May 10, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-08283 Filed 4-18-22; 8:45 am]
BILLING CODE 8011-01-P


